Posted by Robert Verri
Have you ever seen a potential investment property that you immediately fell in love with then without thinking anything through – called the agent with that sense of ‘I have to secure this property if it’s the last thing I do!?’
Have you, after viewing the property and falling in love with it, begun to negotiate a price?
Did you successfully negotiate a deal, buy the property then wonder what to do next?
Maybe your next logical step was to traipse off to the bank to get the finance you need then as an afterthought - you finally called your solicitor to complete the conveyancing, after all, the important steps were already accomplished.
Any of this sound familiar?
If you nodded in agreement then I think we need to do a bit of work!
You see, to be a savvy, successful property investor: you HAVE to have a process; you HAVE to surround yourself with a specialist team that will help and guide you across the following steps:
Feasibility analysis
Finance preparation
Taxation structure
Cash flow positioning
Town planning & architecture
Contract explanation
Apart from town planning, architecture, and contract explanation your accountant should be able to assist you with all the other steps. Before making any offer on a property you need to make sure the deal stacks up. We refer to this as ‘does it work on paper?’.
Property investment is a big commitment. We see investors over extended their debt levels too frequently. They gear themselves up, but, if anything goes wrong such as an increase in interest rates, a decrease in property prices, tenants defaulting, council knocking back plans, not understanding contract covenants, or failing to get finance (just to name a few) the whole deal goes pear shaped.
Some investors seem to manage to secure the acquired finance with little fuss, but, they never forward plan -they never consider the impact on their cash flow once the property has settled. Another ‘faux pas’ is not checking that the loan has been set up correctly – NEVER assume tax deductibility on a loan - you need to get your accountant to review the set up.
My advice: surround yourself with the right team.
You NEED a team that will guide you through investing in property the right way.
You NEED a team that will make sure that you have the correct tax structure and finance arrangement in place.
Follow the process, set up your property purchase correctly from the off set and you will save yourself a lot of time and money in the long run.
If you are thinking of investing in property then talk to us at SP Solutions, with the right team behind you your buying process will be secure. Can you afford not to?
